The Pension Protection Fund (PPF) will not charge a “conventional” levy to private sector defined benefit (DB) pension schemes in the current financial year, it has confirmed today.
The move means DB schemes and their sponsors will save on a collective bill of approximately £45m.
The Pension Schemes Bill contains measures aimed at allowing the PPF to charge no levy without compromising its ability to reintroduce it in the future. The current wording limits increases to 25% of the previous year’s total.
“The legislative changes we’ve needed to further reduce the levy have made good progress, giving us the confidence to act decisively for this year’s levy.”
Kate Jones, PPF
The bill is still making its way through parliament, but the PPF indicated that the necessary legislation had made sufficient progress for it to make a decision on this year’s levy bill. The lifeboat fund had originally proposed a £100m levy for 2025-26, but subsequently delayed billing when it became clear that a rule change was likely.
In a statement, the PPF said: “In making this decision at this stage, the PPF board’s intent was to provide timely clarity for DB schemes and their sponsors, enabling them to better make any associated financial decisions this year.”
A ‘significant milestone’ for PPF in its 20th year
Kate Jones, chair of the PPF, said: “The legislative changes we’ve needed to further reduce the levy have made good progress, giving us the confidence to act decisively for this year’s levy.
“As we reach this significant milestone on our journey to financial self-sufficiency, we recognise the invaluable contribution levy payers have made over the past 20 years. We couldn’t have delivered the protection and peace of mind to members without them.”
The PPF recently marked its 20th anniversary and now boasts a “robust” surplus of £14bn, which it holds as a reserve fund to fund future pension scheme rescues.
Michelle Ostermann, the PPF’s chief executive officer, said: “The PPF plays an invaluable role backstopping the entire DB pension system. It’s a testament to the PPF’s maturity that we’re now in a position to be self-funding.
“By moving to zero levy, I’m delighted that we’re directly supporting the government’s pension reforms, delivering savings for schemes and enabling more growth supporting investment.”
In its statement, the PPF said it would “continue to support policymakers” as the Pension Schemes Bill heads to the next stage of its passage through parliament. It will soon begin engaging with the industry about plans for the 2026-27 levy, which will also “be informed” by the shaping of the bill.
In addition, the organisation said it “continues to prioritise supporting the government’s consideration of PPF indexation levels”, which are also addressed in the bill.
However, there is currently no provision to abolish the separate administration levy, which landed some DB schemes with a collective bill of around £15m when it was reintroduced earlier this year.
The Society of Pension Professionals (SPP) helped draft an amendment to the Pension Schemes Bill that would have scrapped this levy, but pensions minister Torsten Bell persuaded MPs to withdraw it and pledged to abolish the admin levy through a different amendment to the bill. This has yet to be introduced.
Industry welcomes ‘landmark’ decision to cut levy to zero
